If you seriously decide to go about your own business, but don’t know which area to focus on, you should definitely consider a pawn shop. Today it is in demand as never before. According to experts, 1.5 million Muscovites resort to the services of pawnshops. Moreover, there are forecasts that within 5 years the turnover of these structures will double.
Residents of Russian cities show particular interest in them during crises. As a rule, it is then that there is a need for urgent receipt of a certain amount of money. The Russians are laying gold, technology, precious stones. Therefore, there is every reason to think about how to open a pawnshop household appliances. According to statistics, most often in order to get a loan amount, our compatriots bring televisions, microwaves and other appliances.
Popular business
According to official information, to date, more than 500 pawnshops have been registered in Moscow. However, in fact, about 250 companies are employed in this business. Moreover, the vast majority of them (80%) are private pawnshops. They successfully replaced the state-owned Mosgorlombard, which previously had a whole network of points.
The question of how to open a pawnshop of household appliances is also relevant against the backdrop of an ever-growing market. The fact is that, according to official information again, every year the number of companies engaged in this activity grows by an average of 25%. However, about a quarter of pawnshops do not cope with the harsh realities of the market and die without lasting even a year. However, new companies immediately come to their place, ready to provide money to the population on the security of various property.
Many want to invest
If they don’t have enough funds for their turnover, they actively resort to the help of sponsors. By the way, investors with pleasure not only provide their finances for the development of this cost-effective business, but also acquire pawnshops with no less interest.
If you wondered how to open a pawnshop of household appliances, then you should immediately understand that this procedure will be significantly different from the registration of a regular company. You will need to comply with all requirements of the law, and in case of any violations you will be severely fined. Therefore, let's thoroughly analyze this question from scratch.
At the first stage, regulatory documents are important
First of all, carefully study the laws that govern the work of pawn organizations. Remember that ignorance of the law will not relieve you of responsibility. The law of the Russian Federation “On pawnshops” should become the main thing for you. In order to open a pawnshop, you need to open an LLC.
If your company will deal with precious stones, then in this case you will need to register with two public services. The Federal Financial Monitoring Service and the State Inspection of Assay Supervision of the Russian State Assay Chamber will work with you.
What type of pawnshop do you choose?
Entrepreneurs admit that all Moscow pawnshops are divided into two types. The principle of operation of the pawnshop of the first type is the classical scheme, that is, the profit is added up from the “accumulated” interest on the loan.Of course, the owners of such establishments are very interested in the fact that customers buy back pledged things. They try to do everything so that unclaimed balances are minimal, not more than 5% of the total.
How to achieve this? Pawn shop owners carefully select staff and train them in working with clients. An employee should only make a conclusion about his solvency by one appearance of a visitor. If the person who visited the pawnshop does not make the impression of being prosperous, they politely refuse to provide money. At the same time, trustworthy clients are provided with more interesting loan conditions. So, for example, they can receive large amounts at a low interest rate.
Who are called poachers?
The principle of operation of the pawnshop of the second type is the banal purchase of jewelry scrap. Thanks to such establishments, their owners are enriched with finished jewelry products. Such pawnshops specifically value customers' things significantly below their market value, and the percentage on them is deliberately overstated. In general, everything is done so that a person does not redeem his things back.
Professionals in this market call such pawnshops “poachers” for bonded interest and unwillingness to return the property provided. The same category includes institutions that accept household appliances as collateral.
As a rule, people who bring televisions or microwave ovens to the pawnshop are already brought up, as they say, to the pen and are ready to give the latter in order to get the treasured rubles. This is used by poachers. The percentage in such pawnshops is so high that few people come back for household appliances. After a while, it is safely implemented on specialized sites or in provincial stores.
When deciding on the specialization of your institution and thinking about how to open a pawnshop of household appliances, keep in mind that you will have to deal with desperate people or small criminal elements who will try to sell stolen or illegally obtained goods through you.
And now about the risks
We warn you right away: this business is very difficult to conduct. Before you start doing it, get the appropriate experience. Since you are dealing with various collateral assets of your clients, it is this that is the main source of problems. The biggest difficulties arise with gold.
It often happens on the market that a sample applied to jewelry simply does not correspond to the real quality level of the precious metal. Sometimes it happens that cheap gold is applied to cheap metal. The cost of such a product is very low, however, the set test and appearance may indicate otherwise.
It smells like crime
Another big problem is stolen jewelry. As a rule, they try to sell them at pawnshops. Of course, a thief can be caught, however, in this case, the police will confiscate the items that have been put into your institution and confiscate evidence. The most unpleasant thing is that the owner of the pawnshop will not be compensated. Moreover, you can be constantly invited to the courts as a witness.
Under the same risks, institutions that take cars or various household appliances as collateral fall. Also, do not exclude the likelihood that during storage the mortgaged property will simply become worthless. And it happens that pawnshops rob. In such cases, thieves take away not only money, but also the things of your customers. Your pawnshop is, of course, good. But try to take into account all possible risks in order to be able to adequately respond to them.
Investments in pawnshops and how much you can earn on them
In general, this business cannot be called cheap. In order to fully engage in it, you need a good investment. Experienced entrepreneurs say that on average pawnshop equipment will cost around $ 17,000.This amount will need to be invested in the repair of the premises, the purchase of office equipment, a minimum set of furniture, the purchase of equipment, the installation of safes, special accounting programs, the creation and propagation of advertising brochures and so on. It will also be necessary to purchase special testers to test the equipment (since you decided to deal with it specifically) for performance. Do not forget about high-quality software, it will greatly simplify the work.
In addition, you must have sufficient funds in order to issue loans to customers. On average, up to 350,000 dollars can go into opening a pawnshop. At the same time, up to 17,000 will be spent on repairs and equipment for the pawnshop, and the remaining funds are needed for loans.
This is the sum!
Up to $ 30,000 can be spent on your institution every month. What is included in this amount? First of all, it will include the rental of premises (from 40 square meters or more), the salary of staff (one director and at least three to four appraisers), the organization of reliable and responsive security and other expenses (advertising, insurance, accounting, administrative items of expenses )
As you can see, the content of the pawnshop business is quite complicated. Therefore, in order to deal with it, it is necessary to have experience in such a field or to be a very talented organizer, able to rally good specialists around him and correctly deliver their work.
What is the profitability of a pawnshop?
We have analyzed the rate currently used in most Moscow pawnshops. And we found out that on average its value is 10%. Taking into account this figure and the amount of necessary expenses, it is easy to understand that the breakeven threshold is a little more than 350 thousand dollars. It follows that in order to cover all expenses and go to zero, your institution must give this amount as loans. At the same time, you will profit if you exceed this threshold.
In other words, you need to give loans to your customers in excess of $ 350,000. Experienced entrepreneurs have estimated that a pawnshop will be cost-effective if it is visited by approximately 40-50 people daily.
At the same time, they should take loans on average from 170 to 340 dollars. Experts say that profit can be achieved in about six months of hard work. Timing may vary and depend on several factors: the presence of competitors, the location of the institution and advertising.
Make yourself known
In order to always have clients, do advertising. Be sure to open the site, post information about yourself on social networks. If finances allow you, give advertising on the radio. Special promotions work very well.
For example, for the first time after opening your point, offer loans at a low rate. Having gained regular customers in this way, you can gradually align the interest on loans to a value that is beneficial to you. Advertising pawnshops is a science. If you do not have time to comprehend it, it is better to hire an experienced marketer who will do all the work for you.
